The euro blame game

Hopi Sen
-
01 December 2011

Britain’s politicians are scared of the future, but they agree it’s all someone else’s fault

This week saw one of the major events of the British political year – the Autumn Statement, in which Britain’s Chancellor of the Exchequer, or finance minister, George Osborne, sets out the public spending plans for the coming year.

This year, autumn was cold and grim. The Conservative-Liberal Democrat coalition government announced that the economy would barely grow for two years, that they would have to borrow more than they expected, that there would be more unemployment, that austerity would last for longer, and those on low incomes would face an extended squeeze.

Nevertheless, the government is vowing to press on. They say there is no alternative, and that it’s all the fault of Europe.

They’re not entirely alone in being glad that Britain isn’t dealing with the ECB. Before confirming this dismal news, Osborne and Ed Balls, Labour’s “shadow” Chancellor, appeared together on Sunday morning TV to discuss Britain’s economic future. After separate interviews, they were invited to share a sofa and reflect on what they had in common.

The answer offered by Balls? Shared relief that Britain was not in the euro and so was not deeply entangled in the current eurozone crisis.

Indeed, the eurozone crisis is politically useful for both Osborne and Balls.

For the Conservatives, whose eighteen months in office have spectacularly failed to produce the growth through austerity they promised, Europe offers what Osborne calls “An explanation, not an excuse” for Britain’s faltering economy. Look, says the Government, things might be bad, but when even Germany can’t sell Bonds, we’re a safe haven.

This isn’t a particularly convincing argument, but Labour struggles to take advantage. The Labour leaders face polls which say the government is doing a bad job, but that voters do prefer the Conservative Economic team to Labour’s and blame Labour for the current mess more than they blame the government.

In essence, the crash broke voter’s faith in Labour’s economic message, and our current leaders are struggling to regain that trust. So for Labour’s Ed Balls, pointing out that he was the man who kept Britain out of the Euro is a way of demonstrating he can be trusted with the big calls.

This new Labour tone on Europe feeds a growing Euro-doubt among Labour politicians. For thirteen years, Labour had to make Britain’s relationship with Europe function against a tide of public scepticism and Conservative disgust.

While Labour ministers saw the benefits of trade, partnership and co-operation, they knew that immigration, bureaucracy, waste and over-regulation were what Europe stood for in voters’ minds. Now economic collapse and incompetence is being added to that modest list. No wonder thoughtful Labour types talk about a new, pragmatic relationship with Europe.

Yet beneath this contentment at Britain’s limited exposure to European crisis, British politicians are terrified that things might soon get even worse. Both Labour and the Tories know that European strength is essential to British recovery. Its absence scares all of us, as does our impotence.

So far, the British political response has been to demand that someone else, whether the ECB, the IMF, Angela Merkel, or the Chinese, sort it all out. British politicians are particularly given to wagging their finger at Germany, demanding that Germany pay more, while insisting Britain should pay nothing.

In the absence of any ability to drive growth in the Eurozone, British political debate is taking an insular turn. Labour spokespeople relentlessly repeat that the government is going “too far, too fast” with public sector cuts and offer voters a “five point plan” for growth, which consists of moderate tax cuts to boost consumption and a little extra spending on a jobs programme.

The government responds by saying things would be worse under Labour as more spending would lead to a Bond market revolt. Yet in his autumn statement, Osborne proposed an “off the books” growth plan. The government is encouraging sovereign wealth funds and pension funds to fund infrastructure, while offering to insure lending to small business to reduce the cost of borrowing. Neither will be cost free. Money never is.
So as well as a shared relief at not being in the euro, Britain’s leaders have a few other things in common. They know the economic crisis could get worse yet, that it’s definitely someone else’s fault, and only their particular package of micro-economic fixes will make things better.

Beyond Westminster, I suspect that British voters mostly note that things aren’t getting any better, no matter who is in office, and are clinging to convention and hoping for better times to come.

Whether better times do come is as much down to decisions made in Frankfurt as in London.

Of course, being British, we don’t want to have a say in what those decisions are. Or rather, we want a say, but not to pay.

Comments

This was sent out by CCHQ more than 22 hours after Brown sat down. And all it is is another list of when he made these annnuocements before. Where is our critique of what those annnuocements mean? Why don't we outline what we would do?

Dima

06 June 2012 19:47

LiamYou need to start asking qustoiens about the make up of the deficit, the structural and the cyclical components that make up the total.The figures put out by the OBR that suggest that the structural deficit is 8.8% of GDP are particularly shaky given the formula behind it. Even the previous figure used by the Treasury, 8.0% looks dodgy and looks to be a number manufactured to bolster the Treasury orthodox view that we were all doomed, dog boiling was the order of the day and the poor must suffer.Anyway 1.1% in Q2 looks like an outlier.Six weeks of bad weather at the start of the year helped, as did the World Cup but I fear the number will be revised down.No matter the final figure it will be far in advance of the train wreck that will be Q3.I fear Sniffy actually believes all this nonsense about slash and burn.We live in interesting times.Finally a cheapshot from me, no more jokes.

Add comment

Name

Enter the code shown:

The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.